Festive season bonanza: Recur Club launches Rs 500 Cr fund for D2C brands
The fund aims to address the two key capital challenges of D2C brands during the festive season: inventory financing and capacity expansion.
Recur Club, a debt platform for startups and SMEs, has launched a Rs 500 crore fund to provide growth capital to D2C (direct-to-consumer) brands during the festive season of the current financial year, according to a statement released by the company. With an average ticket size of around Rs 3 crore, the fund aims to support 150-170 D2C brands, depending on their specific financing needs.
Recur Club highlighted that D2C brands usually require additional capital during the festive season to stock inventory and expand their market presence.
The demand for growth capital in the D2C sector typically increases by about 35% during the festive season. Recur Club identified inventory financing and capacity expansion as the two major capital challenges faced by D2C brands. To address inventory financing, the debt platform enables brands to procure products on their behalf and sell them through existing channels, repaying the financing in installments without adding to their balance sheet debt.
For capacity expansion, Recur Club assists brands in acquiring equipment and fit-outs for new stores, allowing them to pay a monthly rental until the financing is repaid, effectively converting capital expenditures into operating expenses.
Eklavya Gupta, co-founder of Recur Club, emphasized that the festive season can significantly impact the success of a D2C brand, and the current year poses higher challenges. Rising packaging costs, attributed to geopolitical tensions in the Gulf region, have increased by around 21%. Additionally, the shift towards quick commerce is driving the need for brands to stock more inventory across multiple channels earlier than ever.
The D2C fund launched by Recur Club is designed to tackle the timing gap and structure repayments according to the businesses' requirements. In the current financial year, Recur Club has provided approximately Rs 275 crore in growth capital to over 100 D2C brands, bringing the cumulative capital provided for the D2C sector to Rs 1,200 crore.
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